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Why Ireland's housing bubble burst

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Re: Why Ireland's housing bubble burst

#151

Post by robocat »

TimPC wrote: post #150
robocat wrote: post #141

Earlier quoted context omitted.

You are complaining about the first paragraph. The second and third paragraphs are about YoY growth rate. I do try to write clearly, but I think you've replied thoughtlessly.

Your data source has Canada's net migration at 249,000 which is absurdly small compared to Canada's own data. Canada's own data has migration out of the country at 94,576 people but for the 249,000 number to make sense that number would have to be closer to 750,000. It's clear we are using very different sources to calculate the numbers. I'm 100% convinced your source has badly incorrect data for Canada.

Ahhh, sorry.

Yeah that sounds like a significant difference.

I know nothing about Canada's immigration issues, but I did listen to a conservative podcast[1] the other day and at 20:30 it mentioned the 2023 numbers for Canada were:

• 1.27M immigrants

• 471k settling

• 804k temporary residents

So unless our sources are careful how they measure immigration there's a lot of scope for misunderstanding.

No idea why your number is 550k and the podcast mentions 804k.

> I'm 100% convinced your source has badly incorrect data for Canada.

The 249,000 number is sourced from a file provided by the World Bank. It isn't obvious where the World Bank get their number from. Don't ask me!!! Yeah, it looks wrong, but I don't care enough about the topic to go into it further.

Either way from the foreign born population percentages it is very clear that Australia and New Zealand have been accepting lots of immigrants for years and Canada would need to have much larger immigration numbers to get close to catching up.

If you are interested in the effects of immigration on Canada, then keep an eye on Australia and New Zealand to see how it is affecting them.

> For a country of 26M that's 2.1% which is still extremely large but well below 2.5%.

You are comparing chickens to bandicoots. Either compare residents or compare totals including temporary. You are being epically misleading to compare between the two.

From your own numbers, resident immigrant growth is ~1% for Canada (471k/40M) and 2.1% for Australia... I would guess New Zealand is around the 2% mark. I have little idea about temp numbers, but they are not zero.

I've personally just been looking at having a student guest rent a room at my place for $250 per week - students don't create as much pressure on housing. Permanent immigrants definitely do.

You seem to me to be trying to misinform.

When people talk about the problems of immigration they are not generally talking about temporary students and temporary workers. Might as well as add tourists on too - they are a contentious issue where I live.

I mostly care about immigration numbers, but you are using temp numbers. Yeah, Canada's temp numbers are whacko and that is discussed in the podcast: the temp student numbers surely can't be sustainable for Canada in the long term.

[1] https://thehub.ca/2024-03-29/this-government-is-oblivious-th...

Re: Why Ireland's housing bubble burst

#152

Post by TimPC »

robocat wrote: post #151
TimPC wrote: post #150

Earlier quoted context omitted.

Your data source has Canada's net migration at 249,000 which is absurdly small compared to Canada's own data. Canada's own data has migration out of the country at 94,576 people but for the 249,000 number to make sense that number would have to be closer to 750,000. It's clear we are using very different sources to calculate the numbers. I'm 100% convinced your source has badly incorrect data for Canada.

Ahhh, sorry. Yeah that sounds like a significant difference. I know nothing about Canada's immigration issues, but I did listen to a conservative podcast[1] the other day and at 20:30 it mentioned the 2023 numbers for Canada were: • 1.27M immigrants • 471k settling • 804k temporary residents So unless our sources are careful how they measure immigration there's a lot of scope for misunderstanding. No idea why your nu…

I think 804k is the number of new temporary residents and 550k is the number of net temporary residents. I think it's reasonable to care about the net change in population from immigration because people are going to strain services in mostly the same way whether they are temporary or permanent. I think many temporary residents do strain housing in similar ways though, Canada has seen a massive increase in demand that seems larger than the 1% number you cared about.

Also I think you're just willfully misinterpreting me at this point because the 2.1% number for Australia included temporary residents. The number for Australia based on only new permanent residents is 195,000/26M = 0.75%

Re: Why Ireland's housing bubble burst

#153

Post by robocat »

TimPC wrote: post #152
robocat wrote: post #151

Earlier quoted context omitted.

Ahhh, sorry. Yeah that sounds like a significant difference. I know nothing about Canada's immigration issues, but I did listen to a conservative podcast[1] the other day and at 20:30 it mentioned the 2023 numbers for Canada were: • 1.27M immigrants • 471k settling • 804k temporary residents So unless our sources are careful how they measure immigration there's a lot of scope for misunderstanding. No idea why your nu…

I think 804k is the number of new temporary residents and 550k is the number of net temporary residents. I think it's reasonable to care about the net change in population from immigration because people are going to strain services in mostly the same way whether they are temporary or permanent. I think many temporary residents do strain housing in similar ways though, Canada has seen a massive increase in demand tha…

I think the issue with this conversation is that you have been talking about temporary immigrants all along, but I did not realise that originally so I have been talking about permanent immigrants all along. Hopefully both of our comments make a lot more sense in that light.

Your first post used the word "immigrants" and talked about the home building rates and the health care sector. Most people don't expect temporary immigrants to have a large impact on health care costs. So I think my initial misunderstanding of you is sensible. I would guess most people mean permanent immigrants when using the word "immigrants" - however I don't know your background...

We also obviously need to be careful when using annualised numbers. For example plenty of the students that come to New Zealand come to learn English over say two months (as I have just been learning since I'm looking at renting a room out to a student or worker).

6 student visas for two months consecutively has the same yearly impact on resources as 1 permanent immigrant. Adding tourist visa numbers to immigrant numbers would be similarly misleading for the same reason. Perhaps we need numbers for a snapshot of all visitors? The information is available to our immigration departments - they know how many people are currently in the country at any point in time.

If the 550k number is a sample at a point of time during the student year then it can be compared as an annualised number - but I can't know the context of your number without knowing your source. If it is a number of VISAs then the number needs to be annualised to work out impact on resources.

I completely agree that temporary immigration has an impact on resources and residents.

I believe that temporary immigration is nowhere near the impact that permanent immigration has on resources - especially in the long term where retired immigrants DO massively affect the health system costs. Temporary immigrants are mostly healthy and sick ones should be covered by travel insurance?

The podcast mentions one long term impact for Canada: that temporary immigrants can have a baby and Canada gives the baby citizenship.

In New Zealand we have massive numbers of tourists over our summer which has a heavy impact on our resources (including housing due to AirBnB). But tourists do pay their way and don't have a long tail of costs (retirement etcetera).

If we wanted to compare temporary residents, then I can include tourists during the tourism season, and suddenly you will find that the numbers for New Zealand are ridiculously high! However I have no idea what it's like for Canada. Our tourism season has a heavy impact - but mostly on tourist locations - less so on our metro areas (although I see personally see the impact of cruise ships on the suburb of Lyttelton in Christchurch).

I recall the podcast seemed to say that your problem with temporary immigrants was a sudden change and that the numbers likely would revert to something more sensible.

I'm sure we can agree that all 3 countries have economic issues with immigration.

New Zealand has been making new houses especially in Auckland and Christchurch. I believe Canada has been falling behind there. See https://news.ycombinator.com/item?id=38430062

And most developed countries are fucked for demographics in the future: permanent immigration is a short term solution but I reckon we are just punting the problem to the future. As a middle aged guy I can see the problem slowly building and I have been doing what I can to prepare!

Since immigration can be a sensitive topic, I want to be clear that I like immigrants and I have close friends and family by marriage that were not born in New Zealand.

All the best. I am hoping to visit Canada in the next 5 years to go skiing. Thank you for the conversation - I comment on HN to learn and I have learnt a few things! Cheers

Re: Why Ireland's housing bubble burst

#154

Post by rsynnott »

CalRobert wrote: post #74
tmnvix wrote: post #5

> Ireland had arguably the world’s largest housing bubble and crash in the 2000s, with prices quadrupling in the decade to 2007, even while supply soared , before crashing by more than half between 2007 and 2012. (emphasis mine) That wasn't the accepted wisdom at the time. Prices going up spelled 'supply shortage' to most. When the tide went out (i.e. credit availability) it revealed an oversupply. We should learn fr…

Ireland taxes income and capital gains very heavily, and has some truly obscene structures like deemed disposal (taking 41% of your _unrealized_ gains in ETF's). I remember how much it stung handing over 52% of my options to the government so they could waste it on being stupid and incompetent. They even have a history of going after people's private retirement savings after the fact - https://www.oireachtas.ie/en/de…

The tax burden on the average person in Ireland isn't actually all that high; IIRC you have to be earning over 120k or so before your total tax burden is high for Europe. It's heavily biased towards the top.

> truly obscene structures like deemed disposal (taking 41% of your _unrealized_ gains in ETF's).

The thing about deemed disposal is, it's essentially a wealth tax, but it's a fairly well-targeted one as they go; generally it only makes sense to invest in ETFs after you've maxed pension contributions, because the tax relief on pension contributions is so generous. Anyone buying ETFs outside of a pension can be assumed to be decently well-off.

The trouble with deemed disposal is that it is difficult to administer. It was originally introduced to deter a form of tax avoidance where people would accumulate money, and gains, in gross roll-up funds (ie non-dividend paying accumulating funds) administered by life companies, forever, then use other engineering to pass it onto descendants largely untaxed, thereby allowing very wealthy people to avoid _ever_ having to pay tax on gains. As such, it wasn't designed with ETFs in mind. People do I think _overstress_ the difficulty of administration a bit, but it could certainly be made easier (for instance by forcing brokers to administer it, as some other European countries do for _their_ weirder taxes).

One quirk is that even _distributing_ ETFs, both gains and dividends, are taxed under exit tax; in practice, this means that in most circumstances no-one should ever buy a distributing ETF (if you're taxed as if you're in a gross rollup product, might as well take advantage of the gross rollup), but, exit tax being lower than income+usc+prsi, there are edge cases for heavily dividend-oriented ETFs where this treatment is actually beneficial.

> Want to put €100 in to a retirement plan? Well, we're going to take €5, just because, and also 1% of your investment every year, all so we can underperform a simple index fund

Is this an occupational pension?! If so you should raise it with your employer; those fees are very, very bad in this day and age. If it's a PRSA just move to a proper provider. Most occupational pensions and PRSAs should allow some form of passive index investment. My entire pension is in a fund tracking the MSCI AWCI index; I also have ETFs which track the MSCI World index. They perform similarly, both pretty close to the indexes (which are slightly different; 'World', confusingly, is developed-world only); the fees on the pension provider fund are a little higher than the ETF, though.

> BUT! Your primary residence? You can sell that for 10 million more than you paid for it and not owe a cent in taxes.

Of course, then you'll have to buy somewhere else to live...

I think the early-naughties housing crisis _was_ fuelled by bad tax policy; there were at the time in practice quite a few incentives to invest in buy-to-let property. The current crisis, though, not so much; taxation of buy-to-let has been tightened up a lot, and small landlords are leaving the market.

Then, and particularly now, anyone who is investing in property in preference to fully funding a pension invested in equities wants their head examined. I'd argue more or less the same for anyone investing in property _after_ maxing the pension, tbh, but I think there's maybe _some_ room for argument there?

Re: Why Ireland's housing bubble burst

#155

Post by rsynnott »

nickpp wrote: post #110
CalRobert wrote: post #74

Earlier quoted context omitted.

Ireland taxes income and capital gains very heavily, and has some truly obscene structures like deemed disposal (taking 41% of your _unrealized_ gains in ETF's). I remember how much it stung handing over 52% of my options to the government so they could waste it on being stupid and incompetent. They even have a history of going after people's private retirement savings after the fact - https://www.oireachtas.ie/en/de…

I believe there are European-based low-cost ETFs that closely mirror the US ones. Both from Vanguard (VWCE, VWRA come to mind) and BlackRock (IWDA).

Yeah, I'm not totally sure what they're complaining about there? Cheapest US S&P500 is 0.03% TER, as far as I can see... And so is the cheapest UTCITS one (SPDR). The ones you've linked are world index trackers, so they're a little more expensive (as you'd expect; they'll typically have to manage about 2000 stocks vs 500, on many markets); they're also accumulating, which again adds a little cost (due to differing US rules on taxation of accumulating funds, accumulating funds are much rarer there, but they're well worth the few bps extra TER in most tax regimes in Europe).

Re: Why Ireland's housing bubble burst

#156

Post by rsynnott »

disgruntledphd2 wrote: post #79
TulliusCicero wrote: post #29

Earlier quoted context omitted.

Rising prices will usually indicate a supply shortage, but for property there's also the element of speculation. In contrast, rents are a more reliable indicator of a shortage, no speculation there.

> In contrast, rents are a more reliable indicator of a shortage, no speculation there. You'd think so, wouldn't you? However, again the Irish market disproves this to some extent. So generally you look at rents as a 12-14 year payback window of the house price (for investment). What happened in Ireland in the last decade is that rents increased, such that investors could pay more for houses, which increased rents et…

> Like, there's all this purpose built accommodation in Dublin that's sitting empty because they want 3k euro for a two bed apartment.

Do you have evidence for this, or is it just something you believe? Last I heard, vacancy rates for REIT-owned build-to-lets in Dublin was _extremely_ low, with the exception of exactly one problem building which the media got very excited about a year or so back.

Re: Why Ireland's housing bubble burst

#157

Post by rsynnott »

tmnvix wrote: post #115
ptrott2017 wrote: post #94

Earlier quoted context omitted.

Not the OP but suspect the source is this: https://www.cso.ie/en/releasesandpublications/ep/p-cpr/censu...

Thank you for this. It does clearly corroborate that figure of 9%. Still, 230,000 dwellings of 2,125,000 in total is a lot to be be vacant during an accommodation crisis. As I said elsewhere, the number of vacant dwellings is higher than most would suspect.

That's census data, and their collection of data is... imperfect. A lot of those 'vacant' dwellings are one of:

* Occupants refused to engage with census taker (I used to have neighbours who did this; you can theoretically be fined for it but I don't think anyone ever has been)

* Home is in the middle of being sold

* Home is uninhabitable.

* Home is in the literal middle of nowhere.

I'd be in favour of measures to free up vacant housing (punitive tax on vacant housing etc; there _is_ a vacant home tax now but it's pretty small), but I wouldn't hold out much hope of getting a really meaningful amount of housing out of it.

Re: Why Ireland's housing bubble burst

#158

Post by rsynnott »

incomingpain wrote: post #133

I haven't looked at IReland's economics in forever, objective canadian observer. Lets see if i can find the cause. Ireland has been in a recession for over a year. Realistically Ireland has been in a depression since covid started, but there seems to be some funny numbers coming out of ireland trying to hide the depression to make it just a recession? Looking at their central bank's balance, Ireland the country effec…

> Looking at their central bank's balance, Ireland the country effectively went bankrupt in October 2006.

... In what sense did Ireland go bankrupt? That would imply that we abandoned at least some of the state's liabilities; in fact the state was criticised by many for not only paying its own liabilities, including those which it could have gotten out of without serious credit damage, but also for unnecessarily taking on others' liabilities (Ireland was briefly about the only country in the world with an _unlimited_ deposit guarantee). Bit confused what you think the _Irish_ central bank has to do with it; the relevant agencies would be the ECB and the NTMA.

> This is when their government hit up against the EU limits on spending. This is when the politicians had to either increase taxation or reduce spending. They chose neither.

We massively increased taxes, massively cut spending, and borrowed vast amounts of money. We spent more per capita bailing out banks than anywhere else on earth. Again, criticism would generally be of _doing that, rather than becoming bankrupt_.

> Their country never recovered from the bankruptcy in 2006. So when covid hit they were unable to afford a response to it.

By any reasonable metric Ireland was in a far better fiscal state in 2019 than in 2006, and we had a fairly extensive and expensive response to covid.

> IReland in 2022 dropped their income tax from 48% to 40%

This is incorrect. Ireland's marginal rate has been 48% or 52% depending on whether you count PRSI (which is not strictly an income tax), has been for over a decade, and continues to be.

Actually, you know what, I'm not going through the rest of this. This is peak HackerNews; absolute nonsense, stated confidently. I'd suspect the involvement of an LLM, but for the grammar.

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